Science is crystal clear about it – time is running out and the mercury is still rising. We have ten years or less to significantly reduce our greenhouse gas emissions if we want to hold warming to 1.5°C above preindustrial levels and limit the most dangerous and irreversible effects of climate change. The chemical sector contributes about five per cent of the current global carbon footprint.1 It is most likely that the industry’s existing and upcoming efforts are falling too short to stay within the planetary boundaries and the remaining carbon budget for the chemical sector. Considering future projections, for instance the production of plastics is expected to increase its share of global oil consumption from 6% to 20% by 2050 with a future demand of plastics to be expected to triple by 2050 to reach more than 1,100 Mt per year with still more than 98% of carbon feedstock coming from fossil resources as of today. 2 3
The role of chemicals in the sustainable transformation
Industrially produced chemical substances are present in more than 90% of manufactured goods and critical to: the transition of the energy sector; enabling a low-carbon mobility; fostering the sustainable transformation of heavy industries (e.g. aluminum, steel and cement production); and improving the way we are living (e.g. introducing more sustainable materials for building and construction, textiles, personal care, automotive and packaging).
Thus, the chemical sector plays a pivotal role in accelerating a sustainable transformation. It is providing innovative solutions to enable downstream partners to work towards a circular and net zero economy. In this context, innovation and complementary recycling technologies and business models are speeding the transition from a linear economy towards a sustainable circular economy - securing the use of materials with high-performance in safety and effectiveness, durability and sustainability.
We are not alone in this - achieving a net zero circular economy needs a holistic approach with value chain collaboration
All relevant future projections for the chemical sector show that a holistic approach is needed to achieve a net zero and circular economy. The electrification of processes, increased recycling efforts and use of more sustainable feedstocks are all needed to accelerate transition. Together with innovative industry solutions, which enable the downstream partners to reach their net zero targets, this will fulfil the expectations of consumers for sustainable products. Frontrunner brands together with key players from the chemical sector are already paving the way towards such critical value chain collaborations (e.g. some UPM examples: Lumene, Vaude). However, this can be only implemented on the necessary scale with bold commitments from all value chain actors.
Let’s face the elephant in the room - significant investments are needed to scale up low-carbon and circular technologies
We see lots of ambitious actions by the chemical industry with a strong focus on improving operations and processes.
But let’s face the elephant in the room: the chemical industry inherently relies on carbon molecules as its main building block, with more than 60% of emissions from upstream (mainly fossil-based feedstocks) and downstream (use and end of life of products) activities. So efforts towards a net zero and circular economy need to focus more extensively on the main levers - around feedstocks and end-of-life.4 There are positive signals that show the willingness of the industry to reduce the impact from feedstocks and end-of-life significantly (Cefic Low-Carbon Projects, Cefic ChemistryCan). However, to fully defossilize the sector there is a need to find alternative carbon sources, shifting towards more sustainable production and consumption, while developing and scaling up low-carbon solutions and circular technologies.
According to the transition pathway for the chemical industry developed by Cefic the EU-wide investments needed to develop the first of a kind commercial low-carbon and circular technologies are around 200 billion Euro. In the long run additional investments in the order of trillions are needed to fully deploy these technologies across Europe.5
We need to act faster and bolder - the full potential of alternative feedstocks needs to be unleashed
Alternative feedstocks are considered as required cornerstone to foster a net-zero and circular economy as anticipated also in the Sustainable Carbon Cycle initiative with its 2030 target of 20% sustainable renewable carbon feedstock. Achieving this target is required to meet the EU’s climate objectives and to increase the EU’s strategic autonomy by reducing reliance on fossil fuels. To achieve the chemical sector’s ambitious long-term goal of 0% virgin fossil and net-zero target will require biobased feedstocks alongside recycled materials and in the future, CO2-based feedstocks (CCU). While biobased feedstocks will play a pivotal role in the upcoming years kicking-off the leverage of alternative feedstocks as long as CO2 based feedstocks and recycled feedstock volumes are ramping up it is essential to establish binding and reliable sustainability standards to scale alternative feedstocks in the long run. The future availability of sustainable biobased feedstocks needs to be built on criteria around additionality, land use change and biodiversity and thus a limited number of biobased feedstocks will be eligible. While the full focus needs to be on all relevant sustainable alternative feedstock options (recycled, CO2 based and biobased) in the long run.
Various publications anticipate a relevant biobased feedstock share in chemicals of 10 - 40% in 2050 to ensure a net zero chemical sector. Thus, we need to find totally new ways to look at our feedstocks by using proven sustainable forest-management techniques, actively transforming our forests in mixed, resilient and biodiverse habitats and by adopting new methods of producing biomass in land and marine based systems.
However, there is a rapidly closing window of opportunity for industry to make the necessary feedstock decisions, which must be seized. Without having industry-endorsed and widely accepted sustainability criteria for renewable carbon feedstocks in place there is a risk of undermining all the efforts to increase the share of more sustainable non-fossil feedstock in line with the Sustainable Carbon Cycles Initiative. Despite the big chemical actors working extensively to increase their alternative feedstock shares, it’s simply not enough to avoid exceeding the carbon budget and to work towards net zero. We need to act faster and bolder.
The first step towards a future beyond fossils - UPM Biorefining
UPM Biorefining combines the company’s biofuels and biochemicals businesses, operating innovative biorefineries in Finland and Germany addressing renewable materials and advanced biofuels markets globally.
UPM is operating a biorefinery for the production of advanced biofuels and renewable naphtha in Lappeenranta, Finland. Renewable naphtha is an excellent wood-based feedstock for plastics and other materials. The UPM bio-naphtha is a drop-in solution that works identically to fossil-based naphtha in all chemical industry solutions and can turn entire value chains into sustainable ones.
The company is further investing 1’180 million Euros to build the world’s first industry scale biorefinery in Leuna, Germany, to convert sustainably sourced, certified hardwood into next generation biochemicals that will enable the vital shift away from fossil-based to renewable materials across a wide range of industries. The biorefinery aims to produce 220’000 tonnes annually in total, with start-up targeted to take place by the end of 2024.
A potential investment in a second biorefinery for the production of advanced biofuels and renewable materials, located at the Port of Rotterdam in the Netherlands, is currently under investigation.